Employers can pay women less based on previous salaries, US court rules

A ruling from a traditionally left-leaning federal appeals court allows employers to pay women less than men for the same job, as long as a man was paid more at his previous job and the employer’s policies justify using past salaries to determine pay.

On Thursday, the Ninth Circuit Court of Appeals ruled in the case of Aileen Rizo, a female employee who sued the county public schools in Fresno after discovering she was being paid less than her male co-workers for doing the same job.

Rizo sued the school in 2014, arguing that although she was being paid a higher salary than her previous employer, her male counterparts had salaries more than $10,000 higher than hers.

According to the lawsuit, the school “conceded that it paid the female plaintiff less than comparable male employees for the same work.” Rizo complained to the County about the disparity, but they informed her that her salary was determined by a salary schedule known as “Standard Operation Procedure 1440.”

When Rizo was hired as a math consultant in 2009, the school determined her starting salary by using a policy where they add 5 percent to the previous salary of any new employee.

The county argued that the pay bump incentivizes potential employees to leave their previous jobs since they are guaranteed to receive a raise. They also said the policy is objective, prevents favoritism and encourages consistency.

A three-judge panel overturned a lower court ruling from February, citing a 1982 ruling by the court that employers could use previous salary information as long as they applied it reasonably and had a business policy that justified it.

In the opinion written by US District Court Judge Lynn Adelman, he said that “prior salary alone can be a ‘factor other than sex’ if the defendant shows that its use of prior salary was reasonable and effectuated a business policy.”

"This decision is a step in the wrong direction if we're trying to really ensure that women have work opportunities of equal pay," Deborah Rhode, who teaches gender equity law at Stanford Law School, said, according to the Associated Press. "You can't allow prior discriminatory salary setting to justify future ones or you perpetuate the discrimination."

The Fresno County Office of Education has since revised their policies after the California Equal Pay Act went into effect on January 1, 2016. Under the new law, employers in the state are prohibited from paying different wages to men and women with the same qualifications.

However, the lawsuit did not mention the state’s Equal Pay Act, since it went into effect after Rizo filed the lawsuit, and the courts have not ruled if the law would apply retroactively.

Rizo’s lawyer, Dan Siegel, told the Associated Press that they have not decided if they are going to take the case to the US Supreme Court.

"The logic of the decision is hard to accept," Siegel said, according to AP. "You're OK'ing a system that perpetuates the inequity in compensation for women.”